IHSS Tax Exempt - Can't E-file with W2 having $0 in Box 1

[ddflair14]

This option doesn't appear to be available for the 2024 tax year.  Is there another option instead of adding 1 in box 1?  

Thanks in advance!

Doug

[thanapooms]

to Employee Tax Expert

That is what i try to say "Nontaxable Medicaid waiver payments"

This option doesn't appear to be available for the 2024 tax year.

[DianeW777]

It is available in TurboTax 2024.  Please review the steps in the article below and you should be able to file without this experience. 

• How do I enter my tax exempt medcaid waiver payments from IHSS in TurboTax?
  • Specifically click the link labeled: I received a W-2 with $0 in box 1.

Please update here if you have more questions and we will help.  

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions: 

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax CD/Download for Windows
2. Select 'Send Tax File to Agent'
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

@thanapooms 

[waver123]

I tried follow your link to enter my ihss form (I'd number in box 3, 5 and 0 in box1).  The link says to enter my box 3 number if it's non zero into box 1.  After I entered, I also do not see an option for "Nontaxable Medicaid waiver payments" in the let's check for uncommon situations.

[Vanessa A]

Do you have box 12 code II?  If so, then this is why you are not seeing the option for nontaxable Medicaid waiver payments.  Box 12 stops the Non Taxable Medicaid Waiver payments box in less common situations from being available. 

Follow these steps to enter your IHSS payments AFTER deleting your W-2 by clicking the trashcan in the summary page next to the W-2:

1. Select income
2. Miscellaneous Income which is under Less Common Income
3. Other Income Not already reported on a Form W-2 or Form 1099
4. Select Yes to did you receive any other wages
5. Continue to the box that asks for your Medicaid Waiver payments
6. You will be asked about using this income for the Earned Income Credit
7. After you do this, if you select yes, you will need to visit the credits and deduction section to answer the Earned Income Credit questions.
8. Continue through to file your return

This should allow you to e-file

[Kupe]

Hi Vanessa- will the Unusual Situation button help with this?  I’ve been unable to efile due to this for 4 years. 

I’m on my employer Disability plan. 

Each year I receive two W2s from my employer. One is my Disability pay and comes from the company Disability and Survivor Trust. The other is employer contributions to my HSA and is reported on Line 12a item W of the other W2. Two completely different EIN numbers as though different companies altogether.

The problem lies in that Line 1 Wages and Tips is blank for the W2 with HSA contributions. Turbotax will wait until you are completely done with your taxes and hit Efile to tell you that your return cannot be eFiled due to no entry or zero in Line 1 of a W2. Turbotax says to Print and mail instead.

[DaveF1006]

Even if there are two EIN numbers, combine the two W2's and report the HSA contribution in Box 12 on the W2 that reports your disability pay. 

[Cecilia_C]

Hi I read your post from 2021 and followed your suggestion to report the IHSS income in the Other Income section.  This solves the issue can't e-file.  But since the income is not reported from W-2, I won't be able to report numbers listed in W-2 box 3-6 (Social security wages, Social security tax withheld, Medicare wages and tips , Medicare tax withheld), box12, box12a, box14 (Other CA-SDI).  My question is would it be okay if those numbers were not reported in 2024 income tax return?  Would it trigger any issues that I don't know about?  Please advise, thanks. 

[MarilynG1]

If you have amounts on your IHSS W-2 in Boxes 3-6, enter your W-2 in the W-2 section under Wages & Income. 

Put the amount from Box 3 into Box 1. 

1. On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.
2. Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHSS W-2, box 3.
   • This is the same amount reported in boxes 3 and 5 of your W-2.
   • Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.

Delete the entry you made in the Other Income section.

Here's more info on How to Enter Tax-Exempt Medicaid Waiver Payments.

@Cecilia_C 

[Kupe]

Even if there are two EIN numbers, combine the two W2's and report the HSA contribution in Box 12 on the W2 that reports your disability pay.

Thanks DaveF1006.   Unfortunately both W2s already have entries on line 12a.   On the main W2 it is category C- imputed income of Group Term Insurance.   The other W2 as I mentioned is item W- employer contribution to my HSA.  

FWIW, line 12b is already taken on the first W2, but both W2s have line 12c blank and so I suppose I could use that.   But this whole thing just doesn't sound right.   Hate to say it but sounds like another Print and Mail year.

[Gnamyo]

Hi how’s it going. Mine is still stuck on recieved. 

[MarilynG1]

Yes, you can have as many entries in Box 12 as you want.

Here's more info on Box 12 Codes.

@Kupe 

[JohnQT]

Hi @MarilynG1 ,

Unfortunately that advice from the article you linked to for "I received a W-2 with $0 in Box 1" is incomplete.  If your W-2 has an entry for code II "Medicaid waiver payments excluded from gross income" in box 12 then it's likely (e.g. here in California) that it's the same figure as in box 3.  And copying box 3 to an otherwise empty box 1 will cause TurboTax to duplicate that figure in it's calculations.  You can clearly see this happen in the Forms view on Form 1040 and Schedule 1...

IMHO that portion of the article needs to be updated to correctly handle the case of "$0 in Box 1" and "not $0 for Code II in Box 12".  Or maybe that entire "copy from box 3 to box 1" advice needs to be scrapped completely?  There should be no reason for TurboTax users to implement such a kludge and it seems that the TurboTax programmers have finally fixed it (likely drive by IRS requirements to now include Medicare waiver payments in W-2 box 12).

I can't speak to the case of "$0 in Box 1" and also "$0 for Code II in Box 12" as that's not the case for my IHSS W-2 and I haven't bothered trying to figure out what calculations TurboTax performs in this case.

(Amazing that this thread has now passed the 5 year mark...  If they can just get that article correctly updated then maybe this thread can finally be locked!)

[Jaymmo]

Hi John, I am in the similar situation as you. What did you end up doing? Did u put $0 or $1 on box 1. Or is deleting the entire w-2 & just entering the income in the “less common income” option doable?

[Jaymmo]

@JohnQT Hi John, I am in the similar situation as you. What did you end up doing? Did u put $0 or $1 on box 1. Or is deleting the entire w-2 & just entering the income in the “less common income” option doable?